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Last month, Iran lifted its ban on Bitcoin to make way for its ‘crypto rial’. Now Iranian authorities have launched PayMon cryptocurrency supposedly backed by national gold reserves. Except, it’s not really cryptocurrency after all since there’s nothing peer-to-peer about it and you still need to trust an intermediary (i.e. the Iranian government).

PayMon Has All the Traits of a Classic Shitcoin

Sputnik caught up with Iranian blockchain specialist Hamid Reza Shaabani, to find out about the features of PayMon and what its potential uses are. The specific details are pretty wooly but it does seem to smell a lot like a shitcoin. Shaabani said:

Much of the PayMon currency will enter the market and will be traded in special exchange offices. Some of it will be used for the development of hosts; and some of it will go to the founders of Ghoghnoos.

When asked why cryptocurrency is so important for Iran, Shaabani waxed lyrical about the nation’s excellent geographical position, the people’s interest, and, of course, the fact that:

Bypassing economic sanctions is one of those cases that cannot be ignored.

Using Cryptocurrency to Bypass U.S. Sanctions

Iran has already been in talks about the possibility of a workaround for U.S. sanctions with several trading partners. These include England, France, Germany, Switzerland, and Russia, among others.

However, since France and England are little more than the USA’s lapdogs, it seems extremely unlikely that Iran’s PayMon will find a taker. It’s highly doubtful that even Germany would accept a crypto rial after they bowed to U.S. pressure back in July preventing Iran from withdrawing funds from German banks.

As Shaabani acknowledged, when it comes to acceptance:

it all depends on foreign legislative bodies.

Users of PayMon have to undergo KYC, which means that the ‘cryptocurrency’ itself is centralized. While it’s supposedly backed by gold, just like Venezuela’s Petro is supposedly backed by oil, one must still trust that the said gold bars are actually there.

What Happened to Petro Gold?

In fact, Iran is not the first country to explore a cryptocurrency backed by gold. Venezuela was looking into the Petro Gold around this time last year, although progress on that seems to have halted.

It’s unlikely that Maduro will find many people to trust his oil or gold-backed currencies. In Iran’s case, though, the gold may actually be there since the country had been squirreling it away for months before the sanctions.

A few glaring issues remain, however. It’s not trustless. It’s not peer-to-peer, or even really cryptocurrency if the network has a few nodes operated by the government. So it’s doubtful that it will have any takers.

The Bitcoin price is “grinding along” at the bottom of its range but could easily hit $8000 by the end of the year, Galaxy Digital CEO Mike Novogratz said as sentiment picks up.

Novogratz: $3400 – $3600 Is ‘Equilibrium’

Speaking to Bloomberg at a conference in Abu Dhabi February 13, Novogratz reiterated his continued faith in Bitcoin’s forthcoming return to form, along with its supremacy over other cryptocurrencies.

“We’ve kind of hit an equilibrium in this $3400 – $3600 zone,” he said.

“Could it go down? Of course it could; all markets could go either way, but it feels like we’re… grinding along at the bottom and the next move will be significantly higher.”

BTC/USD was trading down around 0.3 percent over the past 24 hours, circling $3630. The past month has been broadly stable for the Bitcoin price, which has stayed within a 2 percent corridor since the second week of January.

Despite various reports of institutional investor products launching and attracting interest, however, many well-known commentators favor a short-term prognosis, which will see Bitcoin remain around $3000 or even drop again.

Among the warnings was that of Tone Vays, who in December forecast a floor for Bitcoin price 00 around the highs seen in late 2013 – approximately $1300.

‘Misguided’

Regardless of imminent moves, Novogratz thinks that the next bull run will characterize Bitcoin as digital gold, affording it considerably more prestige than any altcoin:

There’s 118 elements on the periodic table; only one, gold, is valuable because it’s a store of value… Bitcoin is going to be digital gold, it is going to be a place where you have sovereign money[.]

Quizzed over the expense in driving the Bitcoin ecosystem, Novogratz argued that such store of sovereign value “should not” be either free or easy, likening the situation to Fort Knox.

“The idea that it’s supposed to be free and cheap is actually misguided,” he added.

Last month, the World Gold Council characteristically denied any competition Bitcoin posed to the precious metal.

Has Bitcoin price reached equilibrium like Novogratz says? Let us know in the comments below!

Bitcoin traders in Indonesia are protesting what they call excessive capital requirements imposed by the government on cryptocurrency futures trading. The aggrieved brokers say the restrictive law is preventing anyone from participating in the market.

Stifling the Bitcoin Futures Trading Arena

According to The Jakarta Post, the Futures Exchange Supervisory Board (Bappebti) of the Indonesian Trade Ministry issued regulations to govern cryptocurrency futures trading in the country. Among these laws are minimum capital requirements for cryptocurrency futures traders and brokers.

Article 8, paragraph 1 of the regulations stipulate that crypto futures brokerage firms require a minimum paid-up capital of 1 trillion rupiah ($71.7 million). Also, article 24, paragraph 3 of the same set of regulations require Bitcoin futures traders to hold a minimum of 100 billion rupiah ($7.17 million), out of which the law mandates a minimum deposit of 80 billion ruppiah ($5.73 million).

Stakeholders in the industry say the transferred capital requirements far exceed those stipulated for futures trading in mainstream asset classes.

Speaking to Reuters, Oscar Darmawan, the CEO of Indodax, a cryptocurrency exchange platform compared the capital requirements to that of mainstream futures contracts which stands at 2.5 billion rupiah ($179,000).

Back in mid-2018, Bitcoinistreported that Bappebti was legitimizing virtual currencies by classifying them as commodities. While the need to offer consumer protection is legitimate, a 40,000 percent dichotomy in capital requirement for cryptos and mainstream commodities futures trading is seen by industry commentators as excessive.

According to Darmawan, these regulations are counterproductive to the growth of the virtual currency industry. Reports indicate there haven’t been any transactions in the Indonesian cryptocurrency futures trading market to date.

Weekly Bitcoin Trading Volume Reaches New Heights

Meanwhile, BTC trading volume in Indonesia is currently on the rise.

Data from Coin Dance shows that Indonesians traded 102 BTC via Localbitcoins for the week ending February 9, 2019. This figure represents the country’s largest weekly trading volume beating the previous record of 43 BTC set in early October 2016.

In terms of the rupiah, the new weekly BTC trading volume stands at 4.5 billion rupiah. The country’s apex bank banned the use of Bitcoin for payments back in December 2017, but trading cryptos isn’t outlawed.

Do you think the minimum capital requirement imposed on Indonesian BTC futures brokerages is exorbitant? Let us know your thoughts in the comments below.

A new consumer app enabling anyone in the US to order pizza using Bitcoin via the Lightning Network launched last week.

LN Pizza ‘Spurs Awareness And Adoption’

Lightning Pizza, the latest offering from San Francisco-based Bitcoin payment app Fold, claims to be the “first Nation-wide retail service powered by lightning payments meant to spread utility and spur awareness and adoption.”

Users are able to select pizza from Domino’s for collection or delivery to any US address.

Payment is done with Bitcoin, specifically using the Lightning Network, allowing the off-chain transaction to confirm almost instantly with a fee of less than one US cent.

Lightning Reaches New Heights

The Lightning Pizza launch comes at a timely juncture for Lightning, with the ongoing Lightning Torch initiative generating considerable publicity for the protocol.

As Bitcoinistreported, the Torch, which is a relay transaction circulating around the network, has seen involvement from figures including Twitter CEO Jack Dorsey. A push to make Tesla founder Elon Musk get involved continues.

Following confirmation of the full rollout February 13, Fold hinted at prospective expansion plans for Lightning Pizza on social media. These include support for more delivery options, as well as branching out beyond the US market, with Canada first in line.

The service should also appear in the European Union, officials said, without giving specific country details.

According to data monitoring resource 1ML, at press time, Lightning had broken its size and capacity records yet again this week. There are currently almost 6520 nodes, 26,000 channels and a capacity of 673 BTC – a monthly increase of 36 percent.

What do you think about Lightning Pizza? Let us know in the comments below!

“The vast majority of digital tokens… will go to zero,” Digital Currency Group CEO, Barry Silbert told CNBC. However, he is still “as bullish as he has ever been” on Bitcoin, despite the current bear market.

Losing The Dead Weight

Silbert confirmed that he is “not a believer in the vast majority of digital tokens,” referring to 2017’s ICO craze. On the back of the media frenzy around Bitcoin and all things crypto, the flood of ICOs took the industry’s market cap to over $800 billion. But he believes that most of these tokens will eventually be worthless.

Almost every ICO was just an attempt to raise money but there was no use for the underlying token. The vast majority of what’s out there will be eliminated.

Silbert applauded the crackdown on ICOs by the Securities and Exchange Commission, agreeing that most tokens were illegal, unregistered securities.

Barry ‘Bullish as Ever’ on Bitcoin

When it comes to Bitcoin, however, Silbert said he is “as bullish as he has ever been.” As an early investor, he has already seen bitcoin come through two bear markets, followed by full recoveries.

Part of the reason for this bullishness is based on his belief that Bitcoin 00 will unseat gold as a safe-haven asset. He said that “as far as I’m concerned bitcoin has won the race to be digital gold.”

Younger investors don’t hold gold in the same hallowed view as their parents. $30 trillion of baby-boomer wealth is due to be passed on over the next two decades. Silbert thinks that of the proportion of this which is in gold, much may be converted into bitcoin.

…whatever money is in gold is not going to stay in gold. That gets handed down to millennials — I’m highly confident a lot of that will go into bitcoin.

When Bottom?

Silbert is highly invested in the entrance to the market of institutional investors, through his asset management firm, Grayscale Investments.

He believes that in 2019 the infrastructure for that to happen will finally be in place, and when it is, prices will “snap back hard.”

XBT Provider AB planned on launching an exchange-traded product (ETP) in the form of a cryptocurrency basket last year but backed out because one of those cryptocurrencies spoiled the party. Can you guess which one?

As suggested by a report from Bloomberg, XBT CEO Laurent Kssis “didn’t have a clue” about the potential for a Bitcoin Cash (BCH) hard fork — which happened late last year — despite getting the green light from Swedish regulators to launch a cryptocurrency ETP. He told the privately held financial, software, data, and media company:

It’s important to ask how the community is responding to the split and who’s going to support one asset versus the other. If we get it wrong, these assets will drop and if they’re part of the basket we can’t go back because it’s in the final term-sheet.

Though Kssis never explicitly mentions Bitcoin Cash as the culprit, one can put two and two together. The altcoin experienced a high-profile ideological split in Q4 2018 when the community took sides between Bitcoin Cash Satoshi’s Vision (SV) and Bitcoin Cash ABC.

The confusion was largely blamed for pushing the price of Bitcoin (BTC) down below yearly support in dramatic fashion — though one might argue that it was heading down anyway.

Hard forks are indicative of some of the primary issues in cryptos pressuring prices. The overall issue is rapidly increasing crypto supply and negative signals for potential institutional investors of how still nascent the market is.

In even simpler terms, McGlone’s statement could be interpreted as one which claims investors outside of the cryptocurrency industry have no idea why there are so many “Bitcoins” in the first place.

It’s not an easy task to explain to someone how Bitcoin Cash was originally created because some people in the community thought it was more in line with Satoshi Nakamoto’s real vision for peer-to-peer electronic cash, but then that sub-community had an apparent disagreement over what Satoshi Nakamoto’s real vision for peer-to-peer electronic cash actually was — and that one of those people actually claims he is (or “was”) Satoshi Nakamoto.

At the end of the day, if you don’t know enough about cryptocurrencies to know that Bitcoin Cash might hardfork at an all-but-planned date, you probably shouldn’t be offering it in a basket of digital assets to institutional investors.

What do you think about XBT’s putting the breaks on its cryptocurrency ETP? Let us know your thoughts in the comments below!

History has been made today as the US National Debt has crossed the landmark level of $22 trillion. That looks like this: $22,000,000,000,000.

This may seem like a distant number and it’s certainly easy for us to get detached but let me remind you that just about every pension and investment fund in the world holds a large amount of US treasuries. So, we’re all in this big boat together.

Of course, with the high level of inflation over the last few decades, it’s important to put this large round figure into a more tangible context. After all, 22 trillion is just a round number. A large round number but still rather arbitrary.

The best way to understand the national debt is by checking the debt to GDP ratio. In other words how much is the US producing compared to what it owes?

In the following graph, we can see American debt to GDP over the last 50 years. Bloomberg’s Hilary Clark @queenofchartz who produced the graph has admitted that it is the scariest chart she’s ever made.

It’s probably nothing to worry about though. As long as the United States is able to continue making the necessary payments on its debt, the global economy should remain stable. And to be fair, there are certainly other countries with far higher levels of debt.

Today’s Highlights

Please note: All data, figures & graphs are valid as of February 13th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Volatility continues to slide as stocks continue to soar. Optimism is high that the tentative deal to avert a US government shutdown will be grudgingly confirmed by President Trump and that the March 1st deadline to complete a US-China trade deal will be extended.

It’s also been confirmed that President Xi himself will be meeting with US officials in Beijing on Friday to try and hammer out a deal.

On the Brexit front, it seems increasingly likely that this uncertainty is gonna come down to the wire. In an odd headline this morning, it seems that May’s hand may have been tipped…

Guess that goes to show that alcohol and Brexit don’t mix. In any case, the alleged conversation has May’s Chief EU advisor Olly Robins saying that when it comes down to it, UK parliament will be given a choice between May’s deal at the last minute or an extension from the EU to Article 50.

The chance of a no-deal Brexit remains low and many analysts seem to be putting it at about a 10% probability, which is still much higher than zero than it probably should be.

Keep an eye out for the US CPI inflation figures coming out an hour before Wall Street’s opening bell today.

Emerging Crowded Trade

According to a fund manager survey in February, the new most crowded trade at the moment is ‘long emerging markets.’

The title was stolen from ‘long US Dollar’, which held the crown for two months, and was preceded by the ‘long Faang’ position, which managed to remain the most crowded trade for ten consecutive months.

This play is one that we highlighted in our annual outlook webcast (timestamp: 36:48) on January 8th. The Federal Reserve’s monetary tightening in 2018 was putting a choke hold on emerging market economies, which tend to hold a large amount of US Dollar denominated debt. Now that they’ve shifted to a more neutral stance, traders are piling into EEM.

What’s interesting to note is the sentiment of the survey’s participants. Even though it’s the most crowded trade, only 18% actually think that it’s overvalued at the moment.

Crypto’s Asymmetrical Risk

We highlighted some breaking news yesterday about a $40 million investment into crypto by two large public pension funds, but this small bit of news is so fantastic that I’d like to talk about it again today.

One of the things that jumped out at me was something Katherine Molnar said…

You see, the two Fairfax funds involved in this investment have a combined $5.7 billion under management. So the $40 million they’ve put into crypto is only 0.7% of that. This is good money management at play.

Should the crypto market see another year like 2018 with an 80% drawdown, the fund will only lose 0.56% of its total portfolio. As long as the rest of the portfolio performs properly, nobody will even notice the hit.

If crypto has a fantastic year as it did in 2017 and rises by 1000%, their overall portfolio will rise by 7%. This is what we call asymmetric risk, where the risk to the upside far outweighs the downside risk.

Note: For the purpose of simplicity in this analogy, I’ve lumped both Fairfax County funds into one even though they are separate funds.

Traders and investors are always looking for an advantageous risk/reward ratio and now that we’ve already seen a large retracement in the crypto market, the ratio is becoming very attractive. Now that Fairfax County has opened the door, it will be interesting to see if other traditional fund managers join in.

Best regards,Mati Greenspan
Senior Market Analyst

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Researchers at cybersecurity firm, Kaspersky Labs say one-in-ten people have now used Bitcoin and other cryptocurrencies to make purchases online. Also, data from Bitcoin directory service platform, Coinmap shows that businesses accepting Bitcoin have surged by more than 700 percent within the last six years.

Online Retailers Accepting Bitcoin

According to a survey by Kaspersky Labs, about 13 percent of people have used cryptocurrency as a payment method. The study collected responses from more than 12,000 consumers in 22 different countries.

The results of the survey show that crypto use is still the least popular method with 81 percent of respondents saying they used credit/debit cards for online purchases. However, the implication of having 13 percent of people across multiple countries using Bitcoin is profound from an adoption point of view.

Despite a fall in cryptocurrency prices, there is still a strong desire for digital transactions amongst consumers. Our consumer research has found that 13% of people have used cryptocurrency as a payment method, which was surprising to see.

Cryptocurrency prices fell by more than 80 percent in 2018. However, a fraction of internet shoppers seem to have no problems using virtual currencies. More importantly, online retail outlets aren’t shying away from accepting cryptos.

These results also counter the mainstream narrative that cryptos fund no utility in the online retail arena. Critics like JPMorgan would have people believe that merchants aren’t accepting BTC and crypto’s only appeal comes via risky speculative investments.

Bitcoin Acceptance Continues to Grow

Concerning the pace of BTC acceptance, data from Coinmap shows that businesses that accept Bitcoin across the globe have increased by 702 percent since December 2013.

According to Coinmap, there are now 14,346 venues that accept BTC as against 1,789 recorded almost six years ago.

Coinshares CEO, Ryan Radloff, showed this massive increase in BTC acceptance over the past five years in a tweet posted on Tuesday (February 12, 2019). With increasing adoption in countries like Ecuador and Venezuela, the BTC acceptance heat map for the north of South America looks a lot different than it did six years ago.

Reports show that these avenues aren’t restricted to online shopping platforms as brick-and-mortar establishments like Montessori schools and high-end restaurants are also adopting crypto payments. In stores across the United States, Europe, and Asia, the sign “Bitcoin accepted here,” is becoming less of a novelty.

Have you used Bitcoin to pay for goods and services online? Share your experiences below!

Delayed Bitcoin ETFs, subpoenas, and blockchain businesses forced to close, Bitcoin regulation in the U.S. is hardly encouraging innovation. If you’re looking for friendly pastures for your cryptocurrency company, avoid these three states at all costs.

1. New York

New York has consistently hit the top of the list for its unsympathetic Bitcoin regulation. Its infamous BitLicense has been called out as “regulatory overreach” by many a key figure in the industry. These include ShapeShift’s Erik Voorhees and Kraken’s Jesse Powell.

Here we are two miles from the Statue of Liberty and you cannot sell CryptoKitties in the state without that license. That’s the absurdity of what’s happened here.

Powell meanwhile spoke out against the former New York Attorney General Eric Schneiderman. He sent Kraken a request for customer information a full three years after the exchange had stopped doing business in New York.

New York’s BitLicence has forced many a crypto company out of the state, highlighting the fact that regulation at a federal level is needed.

Under the stipulations of BitLicence, exchanges have to disclose all information about their entire global client base. This is something not only abhorrent to most customers but also potentially illegal. Other countries have different privacy laws from the United States.

However, a change may be on the horizon. New York’s Governor Andrew Cuomo recently signed a digital currency study bill creating the first cryptocurrency task force in the US. This will comprise technology and blockchain experts, as well as investors and researchers.

The task force’s goal is to promote a healthier cryptocurrency economy while protecting New York investors. Time will tell if it’s a success or yet another case of regulation on steroids.

2. Rhode Island

Rhode Island recently earned a place on this list as one of the worst states for Bitcoin regulation. Senator Sheldon Whitehouse labeled cryptocurrencies as an easy way for “foreign interference” in American elections. He also laid out new tax regulations for virtual currencies.

The new Rhode Island Senate Bill No. 251 is called “An act relating to taxation — sale and use tax–non-collecting retailers, referrers, and retail sale facilitators act.” Apparently, the intention of the bill is to:

Assess sales tax on marketplace facilitations, including those that provide cryptocurrencies used by buyers to pay for services.

In other words? Make doing business a whole lot harder for blockchain businesses in the state. Wall Street veteran and cryptocurrency supporter Caitlin Long was quick to criticize on Twitter.

She said that companies should just leave states that prevent blockchain innovation and strangle research and development:

Long has made headlines lately by helping the Wyoming state to set out clear regulations that welcome and attract blockchain companies. Wyoming has even introduced bills to support cryptocurrencies as legal tender.

This is far from the backward, draconian case of Rhode Island that still associates cryptocurrencies with criminal activity–and Russia.

3. Arizona

Another newcomer to this list, blockchain attorney Drew Hinkes posted yesterday that Arizona had just become the next hostile state when it comes to Bitcoin regulation. Arizona is proposing a bill that imposes sales tax on marketplace facilitators that accept or require virtual currencies, following the lead from Rhode Island.

Former Wall Street hedge fund manager and popular Bitcoin proponent Mike Novogratz thinks that institutional money will start coming into the cryptocurrency market in the next 6 to 12 months as custody solutions are rolled out.

They Won’t “Rush In on Day One”

Speaking on Bloomberg Daybreak: Middle East, the CEO at Galaxy Digital laid out his current position on Bitcoin and the cryptocurrency market.

Novogratz acknowledged the tumultuous nature of 2018 for the cryptocurrency market, as a lot of the digital currencies have collapsed in value with more than 90 percent, while the market itself has lost upwards of $700 billion.

However, he also remains firm on his feet, holding that recovery will follow.

He said that all the “retail friends that came up and down are washed out” and that the market is in the process of “handing off ownership from retail to institutions.”

The expert outlines that all the architecture which institutions need to “feel comfortable” is currently being put in place.

Namely, Novogratz noted Bakkt and Fidelity as important steps in providing trusted custody solutions, saying that they are likely to come in somewhere next month.

However, he also holds that institutions won’t “rush in on day one” but they would rather take their time and see some “water run through the pipes.”

Nevertheless, Novogratz predicts that institutions will allocate a small amount of their assets into the cryptocurrency market over the next 6 to 12 months while clarifying that “a small amount of institutional assets is a lot of money.”

Bitcoin Will Be ‘Digital Gold’

Commenting on Bitcoin, Novogratz said that the cryptocurrency “is going to be digital gold.” He outlined that it will be a place where “you have sovereign money.”

It’s not US money, it’s not Chinese money, it’s sovereign. And so sovereignty, it costs a lot. It should cost a lot.

Novogratz has said that bitcoin will become “digital gold” before. In December 2018, he said:

I do believe Bitcoin is going to be digital gold. That means it’s the only one of the coins out there that gets to be a legal pyramid scheme. Just like gold is.

But he’s also not the only one to compare Bitcoin to the precious metal. In fact, some proponents like Digital Currency Group’s Barry Silbert have argued that Bitcoin is ’50 times more useful’ than gold.

The popular Bitcoin investors, owners of the Gemini cryptocurrency exchange, Tyler and Cameron Winklevoss, have also said that Bitcoin is better than gold.

Do you think institutional money is coming to the cryptocurrency market? Don’t hesitate to let us know in the comments below!